wall street looking to kick off february in the green after the dow and s&p 500 posted their best monthly performance in nearly two years facebook reporting a big drop off in one key metric a wrap up of the company's quarter coming up. and paypal plunges as ebay says see you later it's february 1, 2018, "worldwide exchange" begins now. ♪ good morning a warm welcome to "worldwide

exchange." i'm wilfred frost. >> i'm seema mody in for sara eisen. good morning to you. >> good morning to you as well happy first day of february. our top story, facebook shares rebounding following a drop after yesterday's close. the company crushing quarterly results but reporting a big drop off in the amount of time users spend on the site. we'll have more on the quarter straight ahead there is the share price move. down as much as 4% when people focus on that drop off on time usage by users after sheryl sandberg said this won't hurt revenue moving forward, you can see the sharp rally back first, let's check in on global markets. >> u.s. futures, we did see a sharp intraday reversal, marketing starting the day lower but ending higher on thursday. the dow is slightly lower by 2 points s&p higher by 6. nasdaq higher by 3 wall street closing higher yesterday, unchanged decision by

the fed was the market mover look at the ten-year note, rising yields has been the story for quite some time now. the yield above 2.7% 2.74 >> let's recap january the dow and s&p 500 had their best month since may of 2016 the dow gained 5.8%. the s&p up 5.6 the nasdaq posted its best month since october, gaining 7%. we did see differentiation in performance. volatility was back. the top ten stocks in the s&p were up more than 20%. the bottom ten stocks were down more than 10%. so, big divergence in performance. the net effect up 5.6% 8 out of 11 sectors were positive for january consumer discretionary led the way higher, up more than 9%. utilities down 3%. the dollar is a massive story. the index posting its worst

month since march of 2016. down over 3% three months in a row of declines this morning also starting lower. >> it's ban peen a positive stat for global stocks. the shanghai closing down by 1%. hang seng closing lower by 0.75%. the nikkei closing higher by 1.7% look at early trade in europe. eurozone final january manufacturing pmi came in in line with expectations at 59.6 you can see stocks mostly higher in europe with the exception of the ftse 100 which is basically flat on the day. dax higher by 0.2% checking on commodities, oil prices this morning following a bit of a gain yesterday. up 0.7% for january as a whole higher bay py a percent today. gold prices up 2% forrian.

this mo for january this morning they are flat >> let's check in on currencies. the dollar has been mixed against a basket of currencies weaker against the euro. firmer against the yen at 109.62 bitcoin had its worst month in three years, losing more than 25% in the month of january. today bitcoin is down about 5% back to our top corporate story, facebook reporting earnings that beat estimates, but the stock was in for a wild ride after hours shares initially dropped on the report but recovered after the coo said facebook is raising its 2018 expense forecast. this positive news came despite a dip in facebook usage and overhaul in the flagship news

feed the positive news is that revenue won't drop despite a drop in usage. let's discuss with victor anthony, internet analyst at aegis capital. talk us through that wild ride last night, why it dipped and then rallied >> initially with the headline numbers, you have a top line revenue beat an eps revenue beat with the one-time tax hit. you had plus 44% advertising rev few growth a slight deceleration from the third quarter, but strong revenue growth of such a large user base, such a large revenue base however facebook did say that they reduced the number of hours spent by roughly 50 million in the fourth quarter and also they reduced the time spent by roughly 5% in the fourth quarter as well and when you look at the user

numbers, which typically facebook adds significant users, monthly active users and daily active users, but this time it was different. it was a mix in the u.s. you saw daily active users decline by 1 million the first time we've seen that the monthly active users were flat those two metrics, the decline in time spent and the decline in the u.s. user growth i think led to this sharp selloff that you saw. but during the conference call, mark zuckerberg said that the decline in users was mostly deliberate they decided to de-emphasize certain content and de-emphasize in the public content led to the decline in the user metrics we saw in the fourth quarter. so it's more a deliberate move not because people were intentionally limiting their time on facebook i think that was positive. they also said that there would be no impact on revenue going

forward we saw that in the reported results that's what you saw in the share price movement in the after hours yesterday. >> if consumers continue to spend less time using facebook what does this mean for the longer-term profitabilities picture? it's up 8% so far in 2018. >> the key thing in the quarter is pricing jumped significantly, roughly 43% year over year that's a trend you'll see continuing so that should sermore than offt the time spent on the platform time spent is not necessarily tied to revenue growth they made that point in the call yesterday. it's advertiser demand that was driving the pricing on the platform, that's driving revenue growth, profitability and free

cash flow growth >> big beat for netflix, small beat for facebook. what do you expect for google still to come? i don't believe you cover amazon and apple. >> i do cover amazon and alphabet i think you will see accelera accelerating growth for amazon and margin expansion they had one of the best fourth quarter i've seen in over 150 years. for alphabet, advertising is strong so i think they'll have a beat as far as search is concerned. as far as the cloud business is concerned. youtube continues to grow like weeds. advertisers have come back to the platform i expect almost accelerated growth for alphabet in the fourth quarter i expect both stocks to be up tonight after they report. >> thank you very much those earnings do continue to roll triple a, alphabet, amazon, apple after the close. let's talk about paypal,

moving lower after the company lost a big partner kate rogers has that story good morning good morning paypal is down about 11% in premarket trading after losing a big chunk of business from one of its largest source of customers. ebay announcing it is going with a new primary payment processor. it will start using adyen, a dutch fintech startup. ebay shoppers can still choose paypal as an option until the middle of 2023 paypal processes payments for several large companies, as well as friends and family, but ebay accounted for 13% of total payments process the news came as paypal reported fourth quarter profit rose 59% despite booking a charge related to the new u.s. tax law. the first quarter outlook was below analyst forecasts.

en ebay shares are up more than 8% this morning back over to you guys. >> thank you very much for that. a big decline in paypal but had a fa nop nall yephenomenal year. microsoft reporting a 6$6.3 billion loss in the second quarter due to a nearly $14 billion tax payment related to profits held overseas. revenue rose 12% on strong growth in its cloud computing business it was an amazing performance from the cloud business in particular revenue up year on year. the gross margin going up to 55% from 48% that allowed the company's gross margin to rise nadella's performance there has been fantastic it was up yesterday before earnings. at&t's fourth quarter

results topping estimates helped by tax cuts and the addition of 300,000 new wireless customers randall stephenson is confident at&t will complete its acquisition of time warner the justice department sued to block the deal a trial is set for march qualcomm posting a fourth quarter loss on charges related to the u.s. tax law and an antitrust fine from the eu the company's first quarter outlook is below estimates it's flat in the premarket. royal dutch shell says fourth quarter profits more than doubled beating forecasts. the company benefited from the surge in oil and gas prices as well as cost-cutting measures. that stock down 1.3% nokia reporting better than expected fourth quarter results which were boosted bay one-time patent payment by huawei a potential increase in spending

by customers could lessen the decline. pandora is cutting 5% of its work force pandora says the move will result in annual savings of $45 million. today is the single busiest day of earnings season before the bell, alibaba, dow dupont, mastercard, time warner and u.p.s. after the close, alphabet, amazon, apple, amgen, visa and mattel it's quadruple "a" when you include amgen. >> >> exciti weekly jobless clat at 8:30 a.m. eastern along with fourth quarter productivity and labor costs. at 10:00, january ism manufacturing index and december construction spending. we will get january auto sales throughout the morning still ahead on "worldwide exchange," the crypto crunch continues. bitcoin down again this morning.

we'll tell you what's dragging things lower. and india rolling out a new budget it's not what everyone expected. we head live to new delhi with details when "worldwide exchange" returns. do you want ts and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online. what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods?

the value of capital is to create, not just wealth, but things that matter. morgan stanley

welcome back to "worldwide exchange." let's look at the market action for you. we're mixed this morning the nasdaq and s&p slightly higher the dow slightly lower it was a fantastic month up about 6% for the dow and s&p.

the nasdaq up just over 7% yesterday the dow up 0.3%. the others just behind it was a bit of a roller coaster session. significant highs during the morning. we were negative close to the close. a bit of a rally approaching the close. treasuries for you, we saw a high on the ten-year of 2.75% yesterday, that's one of the reasons we saw a selloff, then things retraced from there rising today to 2.74 on the ten-year all right. talking about markets that have been on the move india gaining 20% over the last 12 months. india also rolling out its budget with a heavy focus on the rural and agricultural economy the new budget includes a bigger than expected deficit which would be important ahead of next year's re-election for modi. joining us on the line is a

amy kazmin what is the biggest takeaway for international investors when looking at the budget? >> i think international investors will be looking at the fiscal deficit numbers india in the past has had a persistent problem with inflation. the current government of that re modi has been following plans and reducing the fiscal deficit. this year modi is gearing up for his re-election. it's clear they did not want to proceed with fiscal tightening the government in presenting the budget admitted they will breach the fiscal deficit target for this year, and instead of the 3% of gdp fiscal deficit target, they're setting a 3.3% fiscal deficit target

i think investors will be closely looking at whether this 3.3% target is reasonable or whether that, too, is likely to be overshot. they'll be closely analyzing some assumptions underpinning the numbers. >> any commentary from prime minister modi or the finance minister on relaxing rules on doing business in india, which continues to be a concern for some international companies, even the u.s. companies like apple and walmart. >> the prime minister who gave a long speech after the budget was presented, they hailed the efforts of improving the ease of doing business india has climbed up the rankings for the ease of doing business in the world bank's report they also resorted to some protectionist measures so in the budget there's also higher custom fees on mobile

phones duties are being raised from 15% to 20% and also raising customs duties on television and television components. on one hand there's a lot of talk about the ease of doing business, and no doubt that modi is looking to attract foreign investment but doing business in india is a long and complex process. there's overlapping policies, ambiguous rules interpreted differently by different agencies that's a work in process there are also protectionist impulses to encourage foreign investments to come in and use india as an export base rather than open it up for trade. >> thank you for that. i should add that the finance minister said he would do

everything to not allow the use of boin. coming up after the break, we will talk about the bitcoin blues. it's lower again today, we'll analyze that coming up. as we head to break, here's the national weather forecast from bill karins >> good thursday morning to you. frigidaire is greeting us on this february 1st in the northern plains. windchill, how is that for super bowl festivities, negative 21 when you step out the door in minneapolis. this cold front means business as it moves to the south today great lakes getting much colder, areas of the southern plains will get chilly. around 8:00 p.m., light rain turns over to slight snow. overnight tonight, light rain and brief snow through the mid-atlantic and the northeast maybe a few splik splick spots o

morning. the cold today and tomorrow the cold temperatures will be in the middle east. not bad in texas, the southeast is okay, late-day rain showers entering the northeast more "worldwide exchange" when we come back

welcome back to "worldwide exchange." let's check in on the futures. just improved. all three pointing higher. the nasdaq up 11

the dow jones up 18. the s&p up about 8 points. it's been a rough month for bitcoin investors. the digital currency losing half of its value since hitting an all-time high in december. the bad news keeps coming. a japanese cryptocurrency exchange recently lost 5$500 million to hackers and they're not alone. andrea day has what you need to know if i want to invest in cryptocurrencies >> hundreds of millions, just disappearing with no trace ability. >> welcome to the crypto heist no guns required >> there is no regulator there is no insurance. buyer beware >> it's important to consider your electronic wallet with the same paranoia you would your physical wallet. >> reporter: how does today's sundance kid grab your wallet? >> it's through the browser. >> i have seen loads of examples of malicious code that now goes

and tries to scan your computer and website for poorly secured wallets. >> reporter: the experts say even some major cryptocurrency heists have come down to some very basic security flaws. >> we're not talking about complex, scary mathematical issues we're not paying attention to details. >> what can you do >> invest in making sure you have strong passwords. >> and using an offline wallet system is also key with thousands of coins out right now, and new ones being created every day, experts say jumping on the i.c.o. or initial coin offering can put you at risk >> you don't know if it's a real coin offering, a fraudulent coin offering, and they're stealing your money because they can. >> reporter: late last year the s.e.c. halting a $15 million i.c.o. that falsely promised a 13-fold profit in one month. a historic move for the agency >> to me, all these digital

coins are very much like the stock market or the dotcom bubble in the late '90s. it's a gamble. >> reporter: even if you don't invest, cyber criminals can target your computer to mine for coins. digital coins are mined by solving complex math problems. by taking over computers across the globe, criminals can grab massive power and mine away, free of charge >> experts say the best way to protect your cryptocurrency investment is to have strong security on your computer and a tough password clearly these hacks, this specific one which is the largest in history, the one that took place in japan, over 5$500 million worth of tokens was lost it want bitcoi it wasn't bitcoin, it was a newer one that rose to prominence in 2017, but it's a

concern. >> people said this was not hackable, whether the coin itself is not hackable, if the end user getting it stolen from them, it's the same user experience as getting hacked that's one of the holes that has emerged. >> it seems to be denting investor confidence. bitcoin down almost 50% from the all-time high hit on december 17th. still ahead, the top corporate stories, a round up of global markets and house of c"house of cara comeback, they're back up and running in terms of filming. we'll tell you the final details as the filming of the final season begins. we're facing 20 billion security events every day. ddos campaigns, ransomware, malware attacks... actually, we just handled all the priority threats. you did that? we did that. really. we analyzed millions of articles and reports. we can identify threats 50% faster. you can do that? we can do that. then do that.

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a new month a new strategy, what you should be doing with your money on the back of a red hot january. a red flag for facebook. they report a big drop off in one key metric. and drill baby, drill. the u.s. oil market hit a major milestone. it's thursday, february 1, 2018. you're watching "worldwide exchange" on cnbc. good morning, welcome to "worldwide exchange. i'm wilfred frost. >> i'm seema mody in for sara eisen. the markets are slightly higher all three in the green only up a fraction or so

yesterday we were up a fraction at close the dow led the way. let's quickly recap january, the dow and s&p 500, their best month since may of 2016. the dow up 5.8%. the s&p up 5.6%. the nasdaq had the best month since october of 2015, gaining more than 7% out of 11 sectors were positive. consumer discretionary led the way. utilities were down more than 3% the dollar was a massive story, down over 3% it's starting this month down slightly as well >> it's interesting that the s&p 500 is right now outpacing the gains we are seeing in other parts of the world including asia the japanese stock market up 3% for the year china up 4%. >> hong kong up 9% >> hong kong is the winner so far this year. look at how asia closed

overnight. we saw weakness in the hang seng and shanghai composite by feneay 1% the kospi is basically flat on the day. let's look at europe eurozone finally january manufacturing pmi came in at 59.6 wilfred was waiting for this number came in flat it has been on the mend. that's one of the reasons the german index has been outperforming. >> that reading was slightly lower than the last reading at 60 but 59 a sign of strength in terms of the market performance, the ftse was down for ge those markets lagging the u.s. oil prices for you, they were strong in january up 7% for the month. up about a percent today 65.3 for wti we'll discuss oil prices moren

in a moment. the dollar negative for january. flat yesterday but a little bit weaker today against the euro and the pound but stronger against the yen gold prices to round things off, up 2% for january. this morning they are fractionally higher at 1,348. facebook reporting earnings that crushed analysts estimates, but the stock was in for a wild ride after hours shares initially dropped in after-hours trade but the stock recovered after the company maintained its 2018 expense forecast they said also the tech giant would benefit from a weaker dollar in the first half of the year this comes despite a dip in facebook usage and a complete overhaul of the flagship news feed mark zuckerberg addressed the overhaul on the company's earnings call. >> we estimate that these updates decrease time spent on facebook by roughly 5% in the

fourth quarter we made changes to reduce time spent on facebook by an estimated 50 million hours every day to make sure peoples time is well spent that's how serious we are about this >> we heard from face bobbook'so sheryl sandberg, she said the drop in time spent is not a negative >> we're not doing this to be positive or negative for revenue but it's the right thing for our community. the impact it has on monetization is not clearly negative >> facebook shares, you saw that dip after hours. righter now in the premarket by 1.8% shares of paypal are deep in the red after they lost a big partner. kate rogers has more on that >> paypal fell as much as 11% in after hours after losing a big chunk of business from a large source of customers.

ebay announcing its going with a if you primary payment processor. it will start using adyen, a dutch fintech startu after the agreement with paypal ends in 2020 ebay shoppers can still choose paypal as an option until the middle of 2023 paypal processes payments for several large companies, as well individuals and paying friends and family, by eba accounted for 13% of total payments process paypal said the loss will be manageable the news came as paypal reported fourth quarter profit rose 59% despite booking a charge related to the new u.s. tax law. the first quarter outlook was below analyst forecasts. ebay also reported fourth quarter results, revenue during the holiday period topped estimates as it focused on marketing attracting more shoppers shares up more than 9% so far this morning stocks to watch today. microsoft reporting a 6$6.3 billion loss in its second

quarter. that's due to a nearly $14 billion tax payment related to profits held overseas. revenue rose 12% on strong growth in its cloud computing business let's look at at&t fourth quarter results from at&t topping estimates. they were helped by tax cuts and the addition of 300,000 new wireless customers randall stephenson is confident at&t will complete its acquisition of time warner the justice department sued to block the deal a trial is set for march shares are up 2% qualcomm posting a fourth quarter loss on charges related to the u.s. tax law and an antitrust fine from the eu adjusted results beat forecast bu the company's first quarter outlook is below estimates royal dutch shell says fourth quarter profits more than doubled beating forecasts. the company benefited from the surge in oil and gas prices as well as cost-cutting measures.

the stock is down 1% nokia reporting better than expected fourth quarter results which were boosted bay one-time patent payment by huawei while the networks business will remain weak this year, a potential increase in spending by customers could lessen the decline. up 8% for nokia. pandora is cutting 5% of its work force they will also take other measures to cut costs. this comes amid intense competition in the music streaming business pandora says the move will result in annual savings of $45 million. u.s. oil production topping 10 million barrels a day for the first time since 1970. oil prices are up about 0.8% this morning coming after a gain of some 7% for january we're at 65.3 for wti. joining it's on the cnbc news line is stephen schork we have been waiting for this milestone to hit over the last couple of weeks and months

how significant is that we're at 10 million barrels per day state side >> it's a psychological number it has a tremendous psychological effect it underscores the fact that u.s. production has been strong and will continue to be strong for various factors going in through 2018 and into 2019 so the bo m line bottom line ise united states decides to join opec we would be the number one producer within the cartel >> in terms of other factors we have to watch as to whether this oil price rally can continue, the opec production level has been crucial is that less important or more important given the rise in u.s. production >> i think it's going to be the linchpin at this point now what we have to focus on is the u.s. dollar. there's a lot of confusion with the message that's being sent

out by the administration on their stance on the dollar and the treasury secretary got into hot water last week when it appeared to say he was advocating a weaker dollar a weaker dollar is inherently bullish for oil commodity prices, given that it's the world's invoice on currency. so a weak dollar to opec or to russia is very upsetting, because you get paid in those dollars. if you keep the dollar weak you have no incentive to put more oil out into the market. therefore to try to keep prices higher watch the dollar the federal reserve and u.s. treasury department will have just as much of an impact on the direction of oil as will opec. >> a weaker dollar, rising shale output what is your long-term forecast

for oil? right now we're pushing the envelope over the past five years, wti or oil prices have traded between two clusters, between 35 and 65. now we're at the top of that cluster. the next cluster was between $95 and $115 more or less. so right now overthe past five years we haven't been in the middle of that range that's not to say we can't go higher what's interesting is that the producer, the only person who is naturally long oil in this market and who has to sell it never sold more oil forward an we'll continue to see production rise because they have sold a lot of oil that they need to produce to offset contracts. we also have a strong relationship between oil rig counts and four-month lag in wti prices so given that wti rallied significantly for four months there will be more rigs added

going through into the second quarter. right now i think we're pushing up against the limits of the market the danger for opec and oil producers is the higher we go, the more we challenge the demand in elasticity for gasoline we have known from experience that demand becomes elastic for gasoline at above $3.30. this is a national average $3.30 translates into $95 a barrel, which is where the other cluster for oil goes to. so that's what i'm saying here, between 65 and about 85, $90, there's still room to upside for oil to move without making an impact on the demand elasticities for gasoline. we go beyond that, you begin to hurt your prospects. and then invite substitutes into

the market >> okay. great stuff. thank you very much for joining us this morning. >> still ahead, much more on "worldwide exchange" including should president trump nationalize a 5g network and flame flowers up for grabs? not anymore. elon musk's viral sale hitting a hard stop. we'll tell you why

welcome back time for our top trending stories. kate rogers is back with those >> "house of cards" is back up and running. netflix resumed production for its sixth and final season of the hit show without its former star, kevin spacey production was halted in october after allegations of sexual assault and harassment was made against spacey who was later fired. the streaming company announcing diane lane and greg kinear will join the cast this season. love the show. >> i love the show clearly with some things that happened in the last season, kevin spacey doesn't have to be there. he'll be missed. he was a crucial character, but i still think season 6 can be as good as the past ones. >> i hope so it is a great show if you were planning on preordering one of elon musk's flame throwers, you're out of

luck musk sold outof all 20,000 flame throwers, that's $10 million in flame throwers alone. musk tweeting that out this morning also tweeting that all flame flowers will ship with a boring fire extinguisher >> this makes me concerned who are these people buying flame throwers >> they don't ship until may it's another example of people buying products long before delivery from elon musk. >> i understand why you need a car. i don't understand why you need a flame thrower. >> with the cars, people put these huge deposits down years before the car is deliver. >> it's a great car. >> or great flame thrower. mario is heading to the big screen nintendo confirming it's working on a super mario movie the company is teaming up with illumination, the studio behind movies like minions. no word yet on when the movies

will hit theaters. >> interesting to see if this works. they made a film back in my childhood years. there was a mario and luigi film it was terrible. didn't work. >> i played a lot of super mario. i did not see that movie >> there was a movie >> was there >> i'm not imagining that it wasn't fantastic we'll see about this one. time for our must-reads. i have one titled should trump nationalize a 5g network, comes off the back of a leaked memo that was being considered in the white house. the white house proposal at the moment which is just an idea is driven by concerns about security threats related to china's development of 5g networks but the strongest case for building a national network is different done right a national 5g network could save a lot of americans a lot of money and revive

competition. done wrong, it could look like something out of hugo chavez's disastrous economic playbook it goes through the pluses and minuses. it says if you were to do it this is the way it could be made to work. very much not to kind of lead the existing players to build a network and take it off them it has to be done alongside it it's an interesting pick and conversation we're having. off-screen people were saying the uproar would be great fer this w greater if this was a democratic president trying to do this. >> certainly a hot topic my pick is in the "washington post." trump doesn't deserve the credit for the economy. neither does obama the columnist writing janet yellen and the central bank she headed set the most important prices in the world, u.s. interest rates therefore the fed generally influences the economy more directly than the president and

congress this was especially evident during janet yellen's 2014 to 2018 term when partisan gridlock on capitol hill prevented elected officials from launching major policies until the tax cut in december. perhaps an important point to make, that janet yellen's central bank plays a critical role in the economy. >> they certainly do there's no two ways about it we're approaching the top of the hour the team is getting ready for "squawk box. joe kernen has a look at what's coming up. >> you guys, these must-reads. i had something else to talk about. i always have to respond to that i get to not enjoy charles lane when i don't watch when he's on the panel on brett baer's show when you have policies that don't promote growth, the fed is the only game in town. you raise asset prices, you hope the economy gets a stimulus

eventually from the -- from what you're trying to conjure up. eventually if you do growth policies, real growth policies or if there's a prospect of growth policies, i don't think it is the fed at that point. >> sure, but joe -- >> it's a team effort. you need both. >> we needed some emergency measures the rest i don't know. i agree one reason that income inequality worsened when we were trying to -- all we were doing was redistributing wealth. it didn't help the people it was designed to he, but also we had the worst growth of any eight-year period in history after a deep recession after you would expect a good snap back. that's what i blame on not just having growth policies you need the fed to supply the demand once the baton is passed we're in a different -- that's why rates are going up when we say there's a football

game on sunday, wilf, we're talking about the oblong we'll have two hours -- >> it's my two teams >> michael rubin, after that fox deal, they'll pay 6$660 million per season, they'll lose 360 million a year but it's strategic >> it's a huge deal. >> there's no way. it's like this makes no sense. >> thursday night football we look forward to that interview and much more coming up on squawk. busiest day of earnings season kicks off we'll have a preview of what you need to be watching. ♪

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>> there's so much to watch today. i'm watching the memo out of the white house. i'm watching earnings. i want to see what facebook does as they open facebook, as i looked at that report and the stock reaction strikes me like the fish market. you ignore the yelling and screaming and pay attention to the fish the two big canaries in the coal mine are the treasury yield curve. short rates are coming up. the treasury yield curve is getting flatter. that's always -- that happens before a yield curve inverts i'm hoping it won't. it looks like this yield curve will invert, which means longer rates will be lower, longer-term securities will pay lower yields than shorter term securities this kind of an aberration is a typical forecaster predecessor of a recession actually ten of the last 13 recessions >> but michael in the last

couple of weeks we've seen longer ends pick up a bit. >> a little. >> yesterday when we hit 2.75 on the ten-year, that spooked equity markets kind of suggesting that the steepening of the yield curve is feared by equity markets at the moment >> i don't think it's a steepening of the yield curve, i think it's higher rates. we have a market fed on cheap and low interest rates for many years. and you'll watch, if you have gone through, as i've gone through these yield curve inversions in the past, they kind of look like a jellyfish, if you actually start to watch them and plot them on graphs this yield curve still is flat it's like 58 basis points, just over a half point difference between the two-year yield an ten-year yield only a quarter point difference between the ten-year yield and 30-year yield. to take the risk, to go from a treasury security, a bond, the difference between owning it for ten years or 30 years, you only

get paid a quarter point more to own it for 20 years, that's flat but you're paying more for money, mortgage rates are going up, car payments it could slow the economy. i'm not sure the economy is strong enough to deal with significantly higher rates >> we have jay powell getting sworn in on monday what do you expect from him? will he deviate from fed chair janet yellen >> deviate he'll be a bit different i've known jay for a long time very bright, very thoughtful guy. i think he has shown on the fed that he has a tendency to kind of go along and be dovish, but this is a courageous guy if he sees the whites of inflation's eyes, he'll take the necessary action i expect a balanced jay powell pragmatic guy. >> thank you very much for joining us >> thanks. a quick look at futures, pointing higher. not anymore. the dow is a bit lower

the s&p and nasdaq pointing lower. see sea,ha y vy chorem tnkouermu f joining us that's it for "worldwide exchange." "squawk box" is next down to the very server. it keeps your insights from prying eyes, so they're used by no one else but you. it is... the cloud. the ibm cloud. the cloud that's designed for your data. ai ready. secure to the core. the ibm cloud is the cloud for smarter business. you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone.

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starting with some tech titans shares of facebook and microsoft both trading higher. we'll tell you why. the profit parade today is marking the busiest day of earnings season. the names to watch coming up. and can the rally continue the dow and the s&p coming off the best monthly performance in almost two years usually as january goes, so goes the year but past performance no guarantee of the future. today it is a new month. it's thursday, february 1, 2018. we're 1/12th of the way through

this year. "squawk box" begins right now. ♪ ♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" on cnbc. we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. yesterday the markets did end up not at the levels we had seen at this time of the morning yesterday. we had seen the markets up by 240 points in the premarket. by the end of the day, the market was up by 72 points s&p by over a point. the nasdaq up by nine. this morning things look mixed with the dow giving background it's down by 34 points below fair value the s&p 500 and nasdaq indicated positive s&p up by 4 points same thing with th